Tyson Foods shuts plant with loss of 400 jobs

By Joseph James Whitworth

- Last updated on GMT

The plant opened in 1961 as the first plant operated by Iowa Beef Packers (IBP)
The plant opened in 1961 as the first plant operated by Iowa Beef Packers (IBP)

Related tags Cattle Supply and demand

Tyson Foods has closed a plant in Iowa with the loss of 400 jobs because there is too much beef production capacity in the region.

Subsidiary Tyson Fresh Meats said it was reducing its capacity due to a continued lack of available cattle.

The company stopped beef operations at the site in Denison, Iowa, to ‘better align production capacity with current cattle supplies’.

Realities of the beef business

Steve Stouffer, president of Tyson Fresh Meats, said it was a ‘very difficult decision’.

"However, the realities of the beef business have changed and we must continue to change with it to remain successful," ​he said.

"The cattle supply is tight and there's an excess of beef production capacity in the region.

"We believe the move to cease beef operations at Denison will put the rest of our beef business in a better position for future success."                                                                                                                         

Reporting third quarter results earlier this month, the firm said sales volume in the beef segment decreased due to a reduction in live cattle processed. Average sales price increased due to lower domestic availability of beef products.

Operating income decreased due to unfavorable market conditions associated with a decrease in supply of 8%, which drove up fed cattle costs, export market disruptions, the relative value of competing proteins and increased operating costs.

“We expect industry fed cattle supplies to increase around 1% in fiscal 2016 compared to fiscal 2015. Although we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply and demand,” ​said the firm.

More than 50 years

The by-product rendering system at the Denison plant will continue with input from other Tyson locations and will employ 20 people.

Tyson said the affected workers are being given an opportunity to apply for jobs at other locations.

The Denison beef plant opened in 1961 as the first plant operated by Iowa Beef Packers (IBP), a start-up company that grew and was acquired by Tyson Foods in 2001 and renamed Tyson Fresh Meats.

Tyson Fresh Meats' other beef plants are in Amarillo, Texas; Dakota City, Nebraska; Finney County, Kansas; Joslin, Illinois; Lexington, Nebraska and Pasco, Washington.

Cargill closed its Milwaukee, Wisconsin beef harvest facility which employed 600 people, in August last year.

The firm said it was primarily due to the tight cattle supply brought about by producers retaining cattle for herd expansion.

It purchased the beef harvest plant in 2001 and there was a processing capacity of 1,300 to 1,400 animals daily.

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